Zero One: Digital Transformation Isn’t Going Well

Many companies began their digital transformation at least a couple of years ago but can’t seem to get past their troubled youth. Maturity, it seems, is elusive.

Only one out of four companies says it’s digitally maturing, while others are either in the early or middle stages of digital development, according to Deloitte-MIT Sloan Management Review’s 2017 study on global digital business. Worse, this hasn’t changed much over the last three years.

“That consistency may indicate that companies are not advancing digitally – but it could also signal that, amid the rising tide of digital change, many businesses are simply treading water as new digital capabilities emerge to change the definition of the ‘ideal’ digital organization,” wrote Gerald C. Kane, Doug Palmer, Anh Nguyen Phillips, David Kiron and Natasha Buckley, in a Deloitte University Press article.

The Deloitte-MIT study defines maturity as a “learned ability to respond to the environment in an appropriate manner.” Specifically, the study says a digitally maturing organization is transformed in part by technology to improve processes, engage talent, and drive new business models.

A big reason for stunted growth is a missing digital strategy. Either companies don’t have one or it’s not well-thought-out. That is, the strategy doesn’t take a long-term, five-year- view of digital business. The Deloitte-MIT survey found that 80 percent of digitally maturing companies have a clear and coherent strategy in place, compared to 19 percent of early stage companies. Without a strategy, companies engage in too much talk and not enough action.

Or perhaps the thought of tackling digital transformation seems too daunting, and thus digital initiatives are pushed to the margins of the business. There’s a reason it’s called “transformation.” Digital transformation upends the company, affecting everything from business model and customer experience to corporate structure and culture. That’s why digitally maturing companies tend to put digital initiatives at the core of their business, according to the Deloitte-MIT survey.

How companies use technology is also a sign of their maturity. Digitally maturing companies wield technology to make fundamental changes to the way they conduct business, not merely as add-ons and incremental improvements. The Deloitte-MIT survey found that 76 percent of digitally maturing companies apply technology this way compared to 32 percent of business at early stages of digital development.

Then there’s the critical factor of cross-collaboration. Digital transformation is a holistic change to the company that requires breaking down old organizational hierarchies and silos. The Deloitte-MIT survey found that 70 percent of digital maturing businesses use cross-functional teams to organize and implement digital business priorities, compared to 30 percent for early-stage companies.

Not only does cross-collaboration bring in various stakeholders, it can spark innovation. For instance, two PwC executives from vastly different disciplines – CX Strategy Leader Rik Reppe and Chief Creative Officer Juan Carlos Morales – got together and created a model for small, diverse teams to come up with innovative ideas, such as rethinking the digital customer experience.

The Deloitte-MIT study points out the many pitfalls awaiting companies on the road to digital transformation. It’s also where channel companies can help. Tackling technology implementation and integration across departments, making a seismic cultural and organizational shift, and fundamentally changing the business model are Herculean labors happening at once. This is the era of digital transformation.

Based in Silicon Valley, Tom Kaneshige writes the Zero One blog covering digital transformation, AI, marketing tech and the Internet of Things for line-of-business executives. He is eager to hear how digital transformation is impacting your business. You can reach him at [email protected]